Growth Potential Ahead?
While the global economy has gained momentum over the past six months, financial uncertainty and the corresponding risks point to modest growth potential domestically through the end of the year.
We continue to monitor the following contributing factors:
- Broad economic global growth and falling unemployment in the U.S. should continue for the remainder of the year—the effects of which we expect to carry over to wages and inflation.
- Global interest rates have remained subdued after the post-U.S. presidential election increase. We continue to believe in the prospect of rising interest rates—albeit very gradual.
- Headwinds on financial assets caused by full valuations, policy uncertainty, and rising interest rates may limit, but not restrict, potential gains.
- The growth outlook in Europe has accelerated significantly renewing opportunities for international investment.
- Passive investment market share has grown dramatically at the expense of active management—a trend we expect to continue.
Given these trends, we have identified four key themes to help guide investors through this fluid and changing landscape:
- Industry Changes Require Evolved Solutions
- Volatility in a Single-Digit Return Environment
- Looking Beyond U.S. Large-Cap Equities
- An Uptick in Inflation
All investments are subject to market risk, including possible loss of principal. Diversification cannot assure a profit or protect against a loss in a declining market.
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